APPENDIX A: RESUME OF FRANK C. GRAVES Mr. Frank Graves is a Principal of The Brattle Group who specializes in regulatory and financial economics, especially for electric and gas utilities. He has assisted utilities in forecasting, valuation, and risk analysis of many kinds of long range planning and service design decisions, such as generation and network capacity expansion, supply procurement and cost recovery mechanisms, network flow modeling, renewable asset selection and contracting, and hedging strategies. He also provides consulting and expert witness support for commercial litigation matters, such as contract disputes and securities fraud proceedings. He has testified before the FERC and many state regulatory commissions, as well as in state and federal courts, on such matters as integrated resource planning (IRPs), the prudence of prior investment and contracting decisions, costs and benefits of new services, policy options for industry restructuring, adequacy of market competition, and competitive implications of proposed mergers and acquisitions. In the area of financial economics, he has assisted and testified for companies in regard to contract damages estimation, securities litigation suits, special purpose audits, tax disputes, risk management, and cost of capital estimation. He received an M.S. with a concentration in finance from the M.I.T. Sloan School of Management in 1980, and a B.A. in Mathematics from Indiana University in 1975. AREAS OF EXPERTISE

♦ Utility Planning and Operations ♦ Regulated Industry Restructuring ♦ Market Competition ♦ Electric and Gas Transmission ♦ Financial Analysis

EXPERIENCE Utility Planning and Operations

♦ Air quality and other power plant environmental regulations are being tightened considerably in the period from about 2014-2018. Mr. Graves has co-developed a market and financial model for determining what power plants are most likely to retire vs. retrofit with new environmental controls, and how much this may alter their profitability. This has been used to help several power market participants assess future capacity needs, as well as to adjust their price forecasts for the coming decade.

♦ Merchant power plant development and financing depends in part on obtaining a long

term power purchase agreement. Mr. Graves directed a study of what pricing points and risk-sharing terms should be attractive to potential buyers of long-term power supply contracts from a large baseload facility.

♦ Many utilities are pursuing smart meters and time-of-use pricing to increase customer

ability to consume electricity economically. Mr. Graves has led a study of the costs and benefits of different scales and timing of installation of such meters, to determine the

appropriate pace. He has also evaluated how various customer incentives to increase conservation and demand response might be provided over the internet, and how much they might increase the participation rates in smart meter programs.

♦ Wind resources are becoming a critical part of the generation expansion plans and

contracting interests of many utilities, in order to satisfy renewable portfolio standards and to reduce long run exposure to carbon prices and fuel cost uncertainty. Mr. Graves has applied Brattle’s risk modeling capabilities to simulate the impacts of wind resources on the potential range of costs for portfolios of wholesale power contracts designed to serve retail electricity loads. He has also assessed the amount and costs of additional ancillary services that may be required to successfully integrate large quantities of wind generation on the transmission grid.

♦ The potential introduction of environmental restrictions or fees for CO2 emissions has

made generation expansion decisions much more complex and risky. He helped one utility assess these risks in regard to a planned baseload coal plant, finding that the value of flexibility in other technologies was high enough to prefer not building a conventional coal plant.

♦ Mr. Graves helped design, implement, and gain regulatory approvals for a natural gas

procurement hedging program for a western U.S. gas and electric utility. A model of how gas forward prices evolve over time was estimated and combined with a statistical model of the term structure of gas volatility to simulate the uncertainty in the annual cost of gas at various times during its procurement, and the resulting impact on the range of potential customer costs.

♦ Generation planning for utilities has become very complex and risky due to high natural

gas prices and potential CO2 restrictions of emission allowances. Some of the scenarios that must be considered would radically alter system operations relative to current patterns of use. Mr. Graves has assisted utilities with long range planning for how to measure and cope with these risks, including how to build and value contingency plans in their resource selection criteria, and what kinds of regulatory communications to pursue to manage expectations in this difficult environment.

♦ Several utilities with coal-fired power plants have faced allegations from the U.S. EPA

that they have conducted past maintenance on these plants which should be deemed “major modifications”, thereby triggering New Source Review standards for air quality controls. Mr. Graves has helped one such utility assess limitations on the way in which GADS data can be used retrospectively to quantify comparisons between past actual and projected future emissions. For another utility, Mr. Graves developed retrospective estimates of changes in emissions before and after repairs using production costing simulations. In a third, he reviewed contemporaneous corporate planning documents to show that no increase in emissions would have been expected from the repairs, due to projected reductions in future use of the plant as well as higher efficiency. In all three cases, testimony was presented.

♦ The U.S. Government is contractually obligated to dispose of spent nuclear fuel at commercial reactors after January 1998, but it has not fulfilled this duty. As a result, nuclear facilities that are shutdown or facing full spent fuel pools are facing burdensome costs and risks. Mr. Graves prepared developed an economic model of the performance that could have reasonably been expected of the government, had it not breached its contract to remove the spent fuel.

♦ Capturing the full value of hydroelectric generation assets in a competitive power market

is heavily dependent on operating practices that astutely shift between real power and ancillary services markets, while still observing a host of non-electric hydrological constraints. Mr. Graves led studies for several major hydro generation owners in regard to forecasting of market conditions and corresponding hydro schedule optimization. He has also designed transfer pricing procedures that create an internal market for diverting hydro assets from real power to system support services firms that do not yet have explicit, observable market prices.

♦ Mr. Graves led a gas distribution company in the development of an incentive ratemaking

system to replace all aspects of its traditional cost of service regulation. The base rates (for non-fuel operating and capital costs) were indexed on a price-cap basis (RPI-X), while the gas and upstream transportation costs allowances were tied to optimal average annual usage of a reference portfolio of supply and transportation contracts. The gas program also included numerous adjustments to the gas company’s rate design, such as designing new standby rates so that customer choice will not be distorted by pricing inefficiencies.

♦ An electric utility with several out-of-market independent power contracts wanted to

determine the value of making those plants dispatchable and to devise a negotiating strategy for restructuring the IPP agreements. Mr. Graves developed a range of forecasts for the delivered price of natural gas to this area of the country. Alternative ways of sharing the potential dispatch savings were proposed as incentives for the IPPs to renegotiate their utility contracts.

♦ For an electric utility considering the conversion of some large oil-fired units to natural

gas, Mr. Graves conducted a study of the advantages of alternative means of obtaining gas supplies and gas transportation services. A combination of monthly and daily spot gas supplies, interruptible pipeline transportation over several routes, gas storage services, and "swing" (contingent) supply contracts with gas marketers was shown to be attractive. Testimony was presented on why the additional services of a local distribution company would be unneeded and uneconomic.

♦ A power engineering firm entered into a contract to provide operations and maintenance

services for a cogenerator, with incentives fees tied to the unit's availability and operating cost. When the fees increased due to changes in the electric utility tariff to which they were tied, a dispute arose. Mr. Graves provided analysis and testimony on the avoided costs associated with improved cogeneration performance under a variety of economic scenarios and under several alternative utility tariffs.

♦ Mr. Graves has helped several pipelines design incentive pricing mechanisms for

recovering their expected costs and reducing their regulatory burdens. Among these have been Automatic Rate Adjustment Mechanisms (ARAMs) for indexation of operations and maintenance expenses, construction-cost variance-sharing for routine capital expenditures that included a procedure for eliciting unbiased estimates of future costs, and market-based prices capped at replacement costs when near-term future expansion was an uncertain but probable need.

♦ For a major industrial gas user, he prepared a critique of the transportation balancing

charges proposed by the local gas distribution company. Those charges were shown to be arbitrarily sensitive to the measurement period as well as to inconsistent attribution of storage versus replacement supply costs to imbalance volumes. Alternative balancing valuation and accounting methods were shown to be cheaper, more efficient, and simpler to administer. This analysis helped the parties reach a settlement based on a cash-in/cash-out design.

♦ The Clean Air Act Amendments authorized electric utilities to trade emission allowances

(EAs) as part of their approach to complying with SO2 emissions reductions targets. For the Electric Power Research Institute (EPRI), Mr. Graves developed multi-stage planning models to illustrate how the considerable uncertainty surrounding future EA prices justifies waiting to invest in irreversible control technologies, such as scrubbers or SCRs, until the present value cost of such investments is significantly below that projected from relying on EAs.

♦ For an electric utility with a troubled nuclear plant, Mr. Graves presented testimony on

the economic benefits likely to ensue from a major reorganization. The plant was to be spun off to a jointly-owned subsidiary that would sell available energy back to the original owner under a contract indexed to industry unit cost experience. This proposal afforded a considerable reduction of risk to ratepayers in exchange for a reasonable, but highly uncertain prospect of profits for new investors. Testimony compared the incentive benefits and potential conflicts under this arrangement to the outcomes foreseeable from more conventional incentive ratemaking arrangements.

♦ Mr. Graves helped design Gas Inventory Charge (GIC) tariffs for interstate pipelines

seeking to reduce their risks of not recovering the full costs of multi-year gas supply contracts. The costs of holding supplies in anticipation of future, uncertain demand were evaluated with models of the pipeline's supply portfolio that reveal how many non-production costs (demand charges, take-or-pay penalties, reservation fees, or remarketing costs for released gas) would accrue under a range of demand scenarios. The expected present value of these costs provided a basis for the GIC tariff.

♦ Mr. Graves performed a review and critique of a state energy commission's assessment of

regional natural gas and electric power markets in order to determine what kinds of pipeline expansion into the area was economic. A proposed facility under review for regulatory approval was found to depend strongly on uneconomic bypass of existing

pipelines and LDCs. In testimony, modular expansion of existing pipelines was shown to have significantly lower costs and risks.

♦ For several electric utilities with generation capacity in excess of target reserve margins,

Mr. Graves designed and supervised market analyses to identify resale opportunities by comparing the marginal operating costs of all this company’s power plants not needed to meet target reserves to the marginal costs for almost 100 neighboring utilities. These cost curves were then overlaid on the corresponding curve for the client utility to identify which neighbors were competitors and which were potential customers. The strength of their relative threat or attractiveness could be quantified by the present value of the product of the amount, duration, and differential cost of capacity that was displaceable by the client utility.

♦ Mr. Graves specified algorithms for the enhancement of the EPRI EGEAS generation

expansion optimization model, to capture the first-order effects of financial and regulatory constraints on the preferred generation mix.

♦ For a major electric power wholesaler, Mr. Graves developed a framework for estimating

how pricing policies affect the relative attractiveness of capacity expansion alternatives. Traditional cost-recovery pricing rules can significantly distort the choice between two otherwise equivalent capacity plans, if one includes a severe "front end load" while the other does not. Price-demand feedback loops in simulation models and quantification of consumer satisfaction measures were used to appraise the problem. This "value of service" framework was generalized for the Electric Power Research Institute.

♦ For a large gas and electric utility, Mr. Graves participated in coordinating and evaluating

the design of a strategic and operational planning system. This included computer models of all aspects of utility operations, from demand forecasting through generation planning to financing and rate design. Efforts were split between technical contributions to model design and attention to organizational priorities and behavioral norms with which the system had to be compatible.

♦ For an oil and gas exploration and production firm, Mr. Graves developed a framework

for identifying what industry groups were most likely to be interested in natural gas supply contracts featuring atypical risk-sharing provisions. These provisions, such as price indexing or performance requirements contingent on market conditions, are a form of product differentiation for the producer, allowing it to obtain a price premium for the insurance-like services.

♦ For a natural gas distribution company, Mr. Graves established procedures for redefining

customer classes and for repricing gas services according to customers' similarities in load shape, access to alternative gas supplies, expected growth, and need for reliability. In this manner, natural gas service was effectively differentiated into several products, each with price and risk appropriate to a specific market. Planning tools were developed for balancing gas portfolios to customer group demands.

♦ For a Midwestern electric utility, Mr. Graves extended a regulatory pro forma financial model to capture the contractual and tax implications of canceling and writing off a nuclear power plant in mid-construction. This possibility was then appraised relative to completion or substitution alternatives from the viewpoints of shareholders (market value of common equity) and ratepayers (present value of revenue requirements).

♦ For a corporate venture capital group, Mr. Graves conducted a market-risk assessment of

investing in a gas exploration and production company with contracts to an interstate pipeline. The pipeline's market growth, competitive strength, alternative suppliers, and regulatory exposure were appraised to determine whether its future would support the purchase volumes needed to make the venture attractive.

♦ For a natural gas production and distribution company, he developed a strategic plan to

integrate the company's functional policies and to reposition its operations for the next five years. Decision analysis concepts were combined with marginal cost estimation and financial pro forma simulation to identify attractive and resilient alternatives. Recommendations included target markets, supply sources, capital budget constraints, rate design, and a planning system. A two-day planning conference was conducted with the client's executives to refine and internalize the strategy.

♦ For the New Mexico Public Service Commission, he analyzed the merits of a corporate reorganization of the major New Mexico gas production and distribution company. State ownership of the company as a large public utility was considered but rejected on concerns over efficiency and the burdening of performance risks onto state and local taxpayers.

Regulated Industry Restructuring

♦ For several utilities facing the end of transitional “provider of last resort” (or POLR) prices, Mr. Graves developed forecasts and risk analyses of alternative procurement mechanisms for follow-on POLR contracts. He compared portfolio risk management approaches to full requirements outsourcing under various terms and conditions.

♦ For a large municipal electric and gas company considering whether to opt-in to state

retail access programs, Mr. Graves lead an analysis of what changes in the level and volatility of customer rates would likely occur, what transition mechanisms would be required, and what impacts this would have on city revenues earned as a portion of local electric and gas service charges.

♦ Many utilities experienced significant “rate shock” when they ended “rate freeze”

transition periods that had been implemented with earlier retail restructuring. The adverse customer and political reactions have lead to proposals to annual procurement auctions and to return to utility-owned or managed supply portfolios. Mr. Graves has assisted utilities and wholesale gencos with analyses of whether alternative supply procurement arrangements could be beneficial.

♦ The impacts of transmission open access and wholesale competition on electric generators risks and financial health are well documented. In addition, there are substantial impacts on fuel suppliers, due to revised dispatch, repowerings and retirements, changes in expansion mix, altered load shapes and load growth under more competitive pricing. For EPRI, Mr. Graves co-authored a study that projected changes in fuel use within and between ten large power market regions spanning the country under different scenarios for the pace and success of restructuring.

♦ As a result of vertical unbundling, many utilities must procure a substantial portion of

their power from resources they do not own or operate. Market prices for such supplies are quite volatile. In addition, utilities may face future customer switching to or from their supply service, especially if they are acting as provider of last resort (POLR). This problem is a blending of risk management with the traditional least-cost Integrated Resource Planning (IRP). Regulatory standards for findings of prudence in such a hybrid environment are often not well understood or articulated, leaving utilities at risk for cost disallowances that can jeopardize their credit-worthiness. Mr. Graves has assisted several utilities in devising updated procurement mechanisms, hedging strategies, and associated regulatory guidelines that clarify the conditions for approval and cost recovery of resource plans, in order to make possible the expedited procurement of power from wholesale market suppliers.

♦ Public power authorities and cooperatives face risks from wholesale restructuring if their sales-for-resale customers are free to switch to or from supply contracting with other wholesale suppliers. Such switching can create difficulties in servicing the significant debt capitalization of these public power entities, as well as equitable problems with respect to non-switching customers. Mr. Graves has lead analyses of this problem, and has designed alternative product pricing, switching terms and conditions, and debt capitalization policies to cope with the risks.

♦ As a means of unbundling to retain ownership but not control of generation, some

utilities turned to divesting output contracts. Mr. Graves was involved in the design and approval of such agreements for a utility’s fleet of generation. The work entailed estimating and projecting cost functions that were likely to track the future marginal and total costs of the units and analysis of the financial risks the plant operator would bear from the output pricing formula. Testimony on risks under this form of restructuring was presented.

♦ Mr. Graves contributed to the design and pricing of unbundled services on several natural

gas pipelines. To identify attractive alternatives, the marginal costs of possible changes in a pipeline's service mix were quantified by simulating the least-cost operating practices subject to the network's physical and contractual constraints. Such analysis helped one pipeline to justify a zone-based rate design for its firm transportation service. Another pipeline used this technique to demonstrate that unintended degradations of system performance and increased costs could ensue from certain proposed unbundlings that were insensitive to system operations.

♦ For several natural gas pipeline companies, Mr. Graves evaluated the cost of equity capital in light of the requirements of FERC Order 636 to unbundle and reprice pipeline services. In addition to traditional DCF and risk positioning studies, the risk implications of different degrees of financial leverage (debt capitalization) were modeled and quantified. Aspects of rate design and cost allocation between services that also affect pipeline risk were considered.

♦ Mr. Graves assisted several utilities in forecasting market prices, revenues, and risks for

generation assets being shifted from regulated cost recovery to competitive, deregulated wholesale power markets. Such studies have facilitated planning decisions, such as whether to divest generation or retain it, and they have been used as the basis for quantifying stranded costs associated with restructuring in regulatory hearings. Mr. Graves has assisted a leasing company with analyses of the tax-legitimacy of complex leasing transactions by reviewing the extent and quality of due diligence pursued by the lessor, the adequacy of pre-tax returns, the character, time pattern, and degree of risk borne by the buyer (lessor), the extent of defeasance, and compliance with prevailing guidelines for true-lease status.

Market Competition

♦ Mr. Graves has testified on the quality of retail competition in Pennsylvania and on whether various proposals for altering Default Service might create more robust competition.

♦ Regulatory and legal approvals of utility mergers require evidence that the combined

entity will not have undue market power. Mr. Graves assisted several utilities in evaluating the competitive impacts of potential mergers and acquisitions. He has identified ways in which transmission constraints reduce the number and type of suppliers, along with mechanisms for incorporating physical flow limits in FERC’s Delivered Price Test (DPT) for mergers. He has also assessed the adequacy of mitigation measures (divestitures and conduct restrictions) under the DPT, Market-Based Rates, and other tests of potential market power arising from proposed mergers.

♦ A major concern associated with electric utility industry restructuring is whether or not

generation markets are adequately competitive. Because of the state-dependent nature of transmission transfer capability between regions, itself a function of generation use, the quality of competition in the wholesale generation markets can vary significantly and may be susceptible to market power abuse by dominant suppliers. Mr. Graves helped one of the largest ISOs in the U.S. develop market monitoring procedures to detect and discourage market manipulations that would impair competition.

♦ Vertical market power arises when sufficient control of an upstream market creates a

competitive advantage in a downstream market. It is possible for this problem to arise in power supply, in settings where the likely marginal generation is dependent on very few fuel suppliers who also have economic interests in the local generation market. Mr.

Graves analyzed this problem in the context of the California gas and electric markets and filed testimony to explain the magnitude and manifestations of the problem.

♦ The increased use of transmission congestion pricing has created interest in merchant

transmission facilities. Mr. Graves assisted a developer with testimony on the potential impacts of a proposed line on market competition for transmission services and adjacent generation markets. He also assisted in the design of the process for soliciting and ranking bids to buy tranches of capacity over the line.

♦ Many regions have misgivings about whether the preconditions for retail electric access

are truly in place. In one such region, Mr. Graves assisted a group of industrial customers with a critique of retail restructuring proposals to demonstrate that the locally weak transmission grid made adequate competition among numerous generation suppliers very implausible.

♦ Mr. Graves assisted one of the early ISOs with its initial market performance assessment

and its design of market monitoring tests for diagnosing the quality of prevailing competition.

Electric and Gas Transmission

♦ Substantial fleets of wind-based generation can impose significant integration costs on power systems. Mr. Graves assisted in assessing what additional amounts and costs for ancillary services would be needed for a large Western utility.

♦ For a utility seeking FERC approval for the purchase of an affiliate’s generating facility,

Mr. Graves analyzed how transmission constraints affecting alternative supply resources altered their usefulness to the buyer.

♦ As part of a generation capacity planning study, he lead an analysis of how congestion

premiums and discounts relative to locational marginal prices (LMPs) at load centers affected the attractiveness of different potential locations for new generation. At issue was whether the prevailing LMP differences would be stable over time, as new transmission facilities were completed, and whether new plants could exacerbate existing differentials and lead to degraded market value at other plants.

♦ Mr. Graves assisted a genco with its involvement in the negotiation and settlement of

“regional through and out rates” (RTOR) that were to be abolished when MISO joined PJM. His team analyzed the distribution of cost impacts from several competing proposals, and they commented on administrative difficulties or advantages associated with each.

♦ For the electric utility regulatory commission of Colombia, S.A., Mr. Graves led a study

to assess the inadequacies in the physical capabilities and economic incentives to manage voltages at adequate levels. The Brattle team developed minimum reactive power support

obligations and supplement reactive power acquisition mechanisms for generators, transmission companies, and distribution companies.

♦ Mr. Graves conducted a cost-of-service analysis for the pricing of ancillary services

provided by the New York Power Authority. ♦ On behalf of the Electric Power Research Institute (EPRI), Mr. Graves wrote a primer on

how to define and measure the cost of electric utility transmission services for better planning, pricing, and regulatory policies. The text covers the basic electrical engineering of power circuits, utility practices to exploit transmission economies of scale, means of assuring system stability, economic dispatch subject to transmission constraints, and the estimation of marginal costs of transmission. The implications for a variety of policy issues are also discussed.

♦ The natural gas pipeline industry is wedged between competitive gas production and

competitive resale of gas delivered to end users. In principle, the resulting basis differentials between locations around the pipeline ought to provide efficient usage and expansion signals, but traditional pricing rules prevent the pipeline companies from participating in the marginal value of their own services. Mr. Graves worked to develop alternative pricing mechanisms and service mixes for pipelines that would provide more dynamically efficient signals and incentives.

♦ Mr. Graves analyzed the spatial and temporal patterns of marginal costs on gas and

electric utility transmission networks using optimization models of production costs and network flows. These results were used by one natural gas transmission company to design receipt-point-based transmission service tariffs, and by another to demonstrate the incremental costs and uneven distribution of impacts on customers that would result from a proposed unbundling of services.

Financial Analysis

♦ Holding company utilities with many subsidiaries in different states face differing kinds of regulatory allowances, balancing accounts with differing lags and allowed returns for cost recovery, possibly different capital structures, as well as different (and varying) operating conditions. Given such heterogeneity, it can be difficult to determine which subsidiaries are performing well vs. poorly relative to their regulatory and operational challenges. Mr. Graves developed a set of financial reporting normalization adjustments to isolate how much of each subsidiary’s profitability was due to financial, vs. managerial, vs. non-recurring operational conditions, so that meaningful performance appraisal was possible.

♦ Many banks, insurance firms and capital management subsidiaries of large multinational

corporations have entered into long term, cross border leases of properties under sale and leaseback or lease in, lease out terms. These have been deemed to be unacceptable tax shelters by the IRS, but that is an appealable claim. Mr. Graves has assisted several companies in evaluating whether their cross border leases had legitimate business

purpose and economic substance, above and beyond their tax benefits, due to likelihood of potentially facing a role as equityholder with ownership risks and rewards. He has shown that this is a case-specific matter, not per se determined by the general character of these transactions.

♦ Many utilities have regulated and unregulated subsidiaries, which face different types and

degrees of risk. Mr. Graves lead a study of the appropriate adjustments to corporate hurdle rates for the various lines of business of a utility with many types of operations.

♦ A company that incurred Windfall Tax liabilities in the U.K. regarded those taxes as

creditable against U.S. income taxes, but this was disputed by the IRS. Mr. Graves lead a team that prepared reports and testimony on why the Windfall Tax had the character of a typical excess profits tax, and so should be deemed creditable in the U.S. The tax courts concurred with this opinion and allowed the claimed tax deductions in full.

♦ For a defendant in a sentencing hearing for securities’ fraud, Mr. Graves prepared an

analysis of how the defendant’s role in the corporate crisis was confounded by other concurrent events and disclosures that made loss calculations unreliable. At trial, the Government stipulated that it agreed with Mr. Graves’ analysis.

♦ For the U.S. Department of Justice, Mr. Graves prepared an event study quantifying

bounds on the economic harm to shareholders that had likely ensued from revelations that Dynegy Corporation’s “Project Alpha” had been improperly represented as a source of operating income rather than as a financing. The event study was presented in the re-sentencing hearing of Mr. Jamie Olis, the primary architect of Project Alpha.

♦ Mr. Graves has assisted leasing companies with analyses of the tax-legitimacy of

complex leasing transactions. These analyses involved reviewing the extent and quality of due diligence pursued by the lessor, the adequacy of pre-tax returns, the character, time pattern, and degree of risk borne by the buyer (lessor), the extent, purpose and cost of defeasance, and compliance with prevailing guidelines for true-lease status.

♦ For a utility facing significant financial losses from likely future costs of its Provider of

Last Resort (POLR) obligations, Mr. Graves prepared an analysis of how optimal hindsight coverage would have compared in costs to a proposed restructuring of the obligation. He also reviewed the prudence of prior, actual coverage of the obligation in light of conventional risk management practices and prevailing market conditions of credit constraints and low long-term liquidity.

♦ Several banks were accused of aiding and abetting Enron’s fraudulent schemes and were

sued for damages. Mr. Graves analyzed how the stock market had reacted to one bank’s equity analyst’s reports endorsing Enron as a “buy,” to determine if those reports induced statistically significant positive abnormal returns. He showed that individually and collectively they did not have such an effect.

♦ Mr. Graves lead an analysis of whether a corporate subsidiary had been effectively under the strategic and operational control of its parent, to such an extent that it was appropriate to “pierce the corporate veil” of limited liability. The analysis investigated the presence of untenable debt capitalization in the subsidiary, overlapping management staff, the adherence to normal corporate governance protocols, and other kinds of evidence of excessive parental control.

♦ As a tax-revenue enhancement measure, the IRS was considering a plan to recapture

deferred taxes associated with generation assets that were divested or reorganized during state restructurings for retail access. Mr. Graves prepared a white paper demonstrating the unfairness and adverse consequences of such a plan, which was instrumental in eliminating the proposal.

♦ For a major electronic and semiconductor firm, Mr. Graves critiqued and refined a

proposed procedure for ranking the attractiveness of research and development projects. Aspects of risk peculiar to research projects were emphasized over the standards used for budgeting an already proven commercial venture.

♦ In a dispute over damages from a prematurely terminated long-term power tolling

contract, Mr. Graves presented evidence on why calculating the present value of those damages required the use of two distinct discount rates: one (a low rate) for the revenues lost under the low-risk terminated contract and another, much higher rate, for the valuation of the replacement revenues in the risky, short-term wholesale power markets. The amount of damages was dramatically larger under a two-discount rate calculation, which was the position adopted by the court.

♦ The energy and telecom industries have been plagued by allegations regarding trading

and accounting misrepresentations, such as wash trades, manipulations of mark-to-market valuations, premature recognition of revenues, and improper use of off-balance sheet entities. In many cases, this conduct has preceded financial collapse and subsequent shareholder suits. Mr. Graves lead research on accounting and financial evidence, including event studies of the stock price movements around the time of the contested practices, and reconstruction of accounting and economic justifications for the way asset values and revenues were recorded.

♦ Dramatic natural gas price increases in the U.S. have put several natural gas and electric

utilities in the position of having to counter claims that they should have hedged more of their fuel supplies at times in the past. Mr. Graves developed testimony to rebut this hindsight criticism and risk management techniques for fuel (and power) procurement for utilities to apply in the future to avoid prudence challenges.

♦ As a means of calculating its stranded costs, a utility used a partial spin-off of its generation assets to a company that had a minority ownership from public shareholders. A dispute arose as to whether this minority ownership might be depressing the stock price, if a “control premium” was being implicitly deducted from its value. Using event studies and structural analyses, Mr. Graves identified the key drivers of value for this partially spun-off subsidiary, and he showed that value was not being impaired by the

operating, financial and strategic restrictions on the company. He also reviewed the financial economics literature on empirical evidence for control premiums, which he showed reinforced the view that no control premium de-valuation was likely to be affecting the stock.

♦ A large public power agency was concerned about its debt capacity in light of increasing

competitive pressures to allow its resale customers to use alternative suppliers. Mr. Graves lead a team that developed an Economic Balance Sheet representation of the agency’s electric assets and liabilities in market value terms, which was analyzed across several scenarios to determine safe levels of debt financing. In addition, new service pricing and upstream supply contracting arrangements were identified to help reduce risks.

♦ Wholesale generating companies intuitively realize that there are considerable differences

in the financial risk of different kinds of power plant projects, depending on fuel type, length and duration of power purchase agreements, and tightness of local markets. However, they often are unaware of how if at all to adjust the hurdle rates applied to valuation and development decisions. Mr. Graves lead a Brattle analysis of risk-adjusted discount rates for generation; very substantial adjustments were found to be necessary.

♦ A major telecommunications firm was concerned about when and how to reenter the

Pacific Rim for wireless ventures following the economic collapse of that region in 1997-99. Mr. Graves lead an engagement to identify prospective local partners with a governance structure that made it unlikely for them to divert capital from the venture if markets went soft. He also helped specify contracting and financing structures that create incentives for the venture to remain together should it face financial distress, while offering strong returns under good performance.

♦ There are many risks associated with operations in a foreign country, related to the

stability of its currency, its macro economy, its foreign investment policies, and even its political system. Mr. Graves has assisted firms facing these new dimensions to assess the risks, identify strategic advantages, and choose an appropriate, risk-adjusted hurdle rate for the market conditions and contracting terms they will face.

♦ The glut of generation capacity that helped usher in electric industry restructuring in the

US led to asset devaluations in many places, even where no retail access was allowed. In some cases, this has led to bankruptcy, especially of a few large rural electric cooperatives. Mr. Graves assisted one such coop with its long term financial modeling and rate design under its plan of reorganization, which was approved. Testimony was provided on cost-of-service justifications for the new generation and transmission prices, as well as on risks to the plan from potential environmental liabilities.

♦ Power plants often provide a significant contribution to the property tax revenues of the

townships where they are located. A common valuation policy for such assets has been that they are worth at least their book value, because that is the foundation for their cost recovery under cost-of-service utility ratemaking. However, restructuring throws away

that guarantee, requiring reappraisal of these assets. Traditional valuation methods, e.g., based on the replacement costs of comparable assets, can be misleading because they do not consider market conditions. Mr. Graves testified on such matters on behalf of the owners of a small, out-of-market coal unit in Massachusetts.

♦ Stranded costs and out-of-market contracts from restructuring can affect municipalities

and cooperatives as well as investor-owned utilities. Mr. Graves assisted one debt-financed utility in an evaluation of its possibilities for reorganization, refinancing, and re-engineering to improve financial health and to lower rates. Sale and leaseback of generation, fuel contract renegotiation, targeted downsizing, spin-off of transmission, and new marketing programs were among the many components of the proposed new business plan.

♦ As a means of reducing supply commitment risk, some utilities have solicited offers for

power contracts that grant the right but not the obligation to take power at some future date at a predetermined price, in exchange for an initial option premium payment. Mr. Graves assisted several of these utilities in the development of valuation models for comparing the asking prices to fair market values for option contracts. In addition, he has helped these clients develop estimates of the critical option valuation parameters, such as trend, volatility, and correlations of the future prices of electric power and the various fuel indexes proposed for pricing the optional power.

♦ For the World Bank and several investor-owned electric utilities, Mr. Graves presented

tutorial seminars on applying methods of financial economics to the evaluation of power production investments. Techniques for using option pricing to appraise the value of flexibility (such as arises from fuel switching capability or small plant size) were emphasized. He has applied these methods in estimating the value of contingent contract terms in fuel contracts (such as price caps and floors) for natural gas pipelines.

♦ Mr. Graves prepared a review of empirical evidence regarding the stock market's reaction

to alternative dividend, stock repurchase, and stock dividend policies for a major electric utility. Tax effects, clientele shifting, signaling, and ability to sustain any new policies into the future were evaluated. A one-time stock repurchase, with careful announcement wording, was recommended.

♦ For a division of a large telecommunications firm, Mr. Graves assisted in a cost

benchmarking study, in which the costs and management processes for billing, service order and inventory, and software development were compared to the practices of other affiliates and competitors. Unit costs were developed at a level far more detailed than the company normally tracked, and numerical measures of drivers that explained the structural and efficiency causes of variation in cost performance were identified. Potential costs savings of 10-50 percent were estimated, and procedures for better identification of inefficiencies were suggested.

♦ For an electric utility seeking to improve its plant maintenance program, Mr. Graves

directed a study on the incremental value of a percentage point decrease in the expected

forced outage rate at each plant owned and operated by the company. This defined an economic priority ladder for efforts to reduce outage that could be used in lieu of engineering standards for each plant's availability. The potential savings were compared to the costs of alternative schedules and contracting policies for preventive and reactive maintenance, in order to specify a cost reduction program.

♦ Mr. Graves conducted a study on the risk-adjusted discount rate appropriate to a publicly-

owned electric utility's capacity planning. Since revenue requirements (the amounts being discounted) include operating costs in addition to capital recovery costs, the weighted average cost of capital for a comparable utility with traded securities may not be the correct rate for every alternative or scenario. The risks implicit in the utility's expansion alternatives were broken into component sources and phases, weighted, and compared to the risks of bonds and stocks to estimate project-specific discount rates and their probable bounds.

PROFESSIONAL AFFILIATIONS

♦ IEEE Power Engineering Society ♦ Mathematical Association of America ♦ American Finance Association

TESTIMONY Expert report before the United States District Court for the Northern District of New York, in regard to damages from retail supply contract termination on behalf of Hess Corporation, Case No. 5:10-cv-587 (NPM/GHL), April 29, 2011. Expert report on schedule for spent fuel removal at Rancho Seco nuclear power plant, before the U.S. Court of Federal Claims, on behalf of Sacramento Municipal Utility District, No. 09-587C, October 2010. Rebuttal testimony before the Pennsylvania Public Utility Commission on behalf of Allegheny Power, Docket Numbers A-2010-2176520 and A-2010-2176732, on the Impacts of the Merger with First Energy on retail electric competition in Pennsylvania, September 13, 2010. Expert report before the Superior Court of New Jersey on behalf of Chambers Cogeneration Limited Partnership vs. E. I. Du Pont de Nemours and Company, Docket No. L-329-08, concerning interpretation of pricing terms in a long term power purchase agreement, August 23, 2010. Expert report before the United States Court of Federal Claims on behalf of Portland General Electric Company, The City of Eugene, Oregon, and PacifiCorp vs. The United States of America, No. 04-0009C, regarding spent nuclear fuel removal, August 2010. Rejoinder testimony before the Pennsylvania Public Utility Commission on behalf of West Penn Power Company d/b/a Allegheny Power, Docket Number M-2009-2123951, November 6, 2009, on the approval of its Smart Meter Technology Procurement and Installation Plan.

Rebuttal testimony before the Pennsylvania Public Utility Commission on behalf of West Penn Power Company d/b/a Allegheny Power, Docket Number M-2009-2123951, October 27, 2009, on the approval of its Smart Meter Technology Procurement and Installation Plan. Supplemental Direct testimony before the Public Service Commission of Utah, Rocky Mountain Power. Docket No. 09-035-15, regarding need for an energy cost adjustment mechanism, August 2009. Rebuttal report before the United States Court of Federal Claims on behalf of Yankee Atomic Electric Company, Connecticut Yankee Atomic Power Company, Maine Yankee Atomic Power Company, Plaintiffs v. United States of America, No. 98-126C, No. 98-154C, No. 98-474C, July 20, 2009. Expert report before the United States Court of Federal Claims on behalf of Yankee Atomic Electric Company, Connecticut Yankee Atomic Power Company, Maine Yankee Atomic Power Company, Plaintiffs v. United States of America, No. 98-126C, No. 98-154C, No. 98-474C, April 24, 2009. Expert report before the United States District Court for the Eastern District of Pennsylvania on behalf of BJ Energy, LLC, Franklin Power LLC, GLE Trading LLC, Ocean Power LLC, Pillar Fund LLC and Accord Energy, LLC, Plaintiffs v. PJM Interconnection, LLC, No. 09-CV-3649-NS, March 2009 in regard to opportunistic under-collateralization of affiliated trading companies. Rebuttal report on behalf of Wells Fargo & Co. and subsidiaries, Plaintiffs v. United States of America, Docket No. 06-628T, January 15, 2009 in regard to appropriate discount rates for different phases of long-term leveraged leases. Oral and written direct testimony on behalf of PEPCo Holdings Inc. in its Response to Maryland Public Service Commission regarding resource procurement and portfolio design for Standard Offer Service, Case No. 9117, October 1, 2008 and December 15, 2008. Direct testimony on behalf of Ohio Edison Company, et al., regarding considerations affecting the market price of generation service for Standard Service Offer (SSO) customers, July 24, 2008. Docket 08-125. Direct testimony on behalf of Delmarva Power & Light Company before the Public Service Commission of Delaware in support of Delmarva’s “Application for the Approval of Land-Based Wind Contracts as a Supply Source for Standard Offer Service Customers”, July 24, 2008. Oral direct testimony in the United States Court of Federal Claims (No. 04-106C), on behalf of plaintiff Dairyland Power Cooperative in regard to the Government’s performance in accepting spent nuclear fuel under contractual obligations established in 1983, July 17, 2008. Direct testimony for Delmarva Power & Light on risk characteristics of a possible managed portfolio for Standard Offer Service, as part of Delmarva’s IRP filings (PSC Docket No. 07-20), March 20, 2008 and May 15, 2008.

Oral direct testimony on behalf of AWG Leasing Trust and KSP Investments, Inc. v. United States of America regarding the economic substance of a cross-border lease-to-service contract for a German waste-to-energy plant, Case No. 1:07CV0857, U. S. District Court, Northern District of Ohio, Eastern Division, January 2008. Direct testimony before the Public Service Commission of Maryland on behalf of Potomac Electric Power Company and Delmarva Power & Light Company, Case No. 9117, September 14, 2007, regarding portfolio management alternatives for supplying Standard Offer Service. Direct testimony before the Arizona Commerce Commission on behalf of New West Energy Corporation, Docket No. E-03964A-06-0168, August 31, 2007, in regard to preconditions for effective retail electric competition. Direct and rebuttal testimony before the Corporation Commission of the State of Oklahoma, Case No. PUD 200700012, January 17, 2007 and June 18, 2007, on behalf of Oklahoma Gas & Electric Company (OG&E) regarding the application of OG&E for an order of commission granting preapproval to construct Red Rock Generating Facility and authorizing a recovery rider. Testimony in U.S. District Court of New York SI:04Cr733 (TPG), on behalf of defendant Mark Kaiser in regard to whether defendant’s role in accounting misrepresentations could be reliably associated with losses to shareholders. Rebuttal testimony before the Illinois Commerce Commission on behalf of Midwest Generation EME L.L.C. and Edison Mission Marketing and Trading, Docket Number 06-0800, April 6, 2007, on proposed benchmarks for evaluating the Illinois retail supply auctions. Direct and rebuttal testimony before the United States District Court, Southern District of Texas, Houston Division, on behalf of the U.S. Department of Justice, Criminal Number H-03-217, September 12, 2006, on the shareholder impacts of Dynegy’s Project Alpha for the sentencing of Jamie Olis. Direct and rebuttal testimony before the Pennsylvania Public Utility Commission, Docket Nos. R-00061366 and R-00061367, August 24, 2006, on the need for POLR rate cap relief for Metropolitan Edison and Pennsylvania Electric and the prudence of their past supply procurement for those obligations, on behalf of FirstEnergy Corp. Direct testimony before the United States District Court, Southern District of Texas, Houston Division, on behalf of the Deutsche Bank Entities, Docket No. H-01-3624, February 2006, regarding Deutsche Bank Entities’ opposition to Enron Corp’s amended motion for class certification. Expert report and rebuttal report before the United States Court of Federal Claims on behalf of Pacific Gas and Electric Company, Docket No. 04-0074C, into which has been consolidated No. 04-0075C, November 2005, regarding the non-performance of the U.S. Department of Energy in accepting spent nuclear fuel under the terms of its contract.

Direct testimony before the Illinois Commerce Commission on behalf of Midwest Generation EME, LLC, Docket No. 05-0159, June 8, 2005, regarding the appropriate load caps for a POLR auction. Affidavit to the Federal Energy Regulatory Commission on behalf of Dominion Energy, Inc., Docket No. EC05-43-000, April 11, 2005, regarding unmitigated market power arising from the proposed Exelon – PSEG Merger. Expert and rebuttal reports and oral testimonies before the American Arbitration Association on behalf of Liberty Electric Power, LLC, Case No. 70 198 4 00228 04, December 2004, regarding damages under termination of a long-term tolling contract. Oral direct and rebuttal testimony before the United States Court of Federal Claims on behalf of Connecticut Yankee Atomic Power Company, Docket No. 98-154 C, July 2004 (direct) and August 2004 (rebuttal), regarding non-performance of the U.S. Department of Energy in accepting spent nuclear fuel under the terms of its contract. Direct, supplemental and rebuttal testimony before the Public Service Commission of Wisconsin, on behalf of Wisconsin Public Service Corporation and Wisconsin Power and Light Company, Docket No. 05-EI-136, February 27, 2004 (direct), May 4, 2004 (supplemental) and May 28, 2004 (rebuttal) in regard to the benefits of the proposed sale of the Kewaunee nuclear power plant. Testimony before the Public Utility Commission of Texas on behalf of CenterPoint Energy Houston Electric LLC, Reliant Energy Retail Services LLC, and Texas Genco LP, Docket No. 29526, March 2004 (direct) and June 2004 (rebuttal), in regard to the effect of Genco separation agreements and financial practices on stranded costs and on the value of control premiums implicit in Texas Genco Stock price. Rebuttal and additional testimony before the Illinois Commerce Commission, on behalf of Peoples Gas Light and Coke Company, Docket No. 01-0707, November 2003 (rebuttal) and January 2005 (additional rebuttal), in regard to prudence of gas contracting and hedging practices. Rebuttal testimony before the State Office of Administrative Hearings on behalf of Texas Genco and CenterPoint Energy, Docket No. 473-02-3473, October 23, 2003, regarding proposed exclusion of part of CenterPoint’s purchased power costs on grounds of including “imputed capacity” payments in price. Rebuttal testimony before the Federal Energy Regulatory Commission (FERC) on behalf of Ameren Energy Generating Company and Union Electric Company, Docket No. EC03-53-000, October 6, 2003, in regard to evaluation of transmission limitations and generator responsiveness in generation procurement.

Rebuttal testimony before the New Jersey Board of Public Utilities on behalf of Jersey Central Power & Light Company, Docket No. ER02080507, March 5, 2003, regarding the prudence of JCP&L’s power purchasing strategy to cover its provider-of-last-resort obligation. Oral testimony (February 17, 2003) and expert report (April 1, 2002) before the United States District Court, Southern District of Ohio, Eastern Division on behalf of Ohio Edison Company and Pennsylvania Power Company, Civil Action No. C2-99-1181, regarding coal plant maintenance projects alleged to trigger New Source Review. Expert Report before the United States District Court on behalf of Duke Energy Corporation, Docket No. 1:00CV1262, September 16, 2002, regarding forecasting changes in air pollutant emissions following coal plant maintenance projects. Direct testimony before the Public Utility Commission of Texas on behalf of Reliant Energy, Inc., Docket No. 26195, July 2002, regarding the appropriateness of Reliant HL&P’s gas contracting, purchasing and risk management practices, and standards for assessing HL&P’s gas purchases. Direct and rebuttal testimonies before the Public Utilities Commission of the State of California on behalf of Southern California Edison, Application No. R. 01-10-024, May 1, 2002, and June 5, 2002, regarding Edison’s proposed power procurement and risk management strategy, and the regulatory guidelines for reviewing its procurement purchases. Rebuttal testimony before the Texas Public Utility Commission on behalf of Reliant Resources, Inc., Docket No. 24190, October 10, 2001, regarding the good-cause exception to the substantive rules that Reliant Resources, Inc. and the staff of the Public Utility Commission sought in their Provider of Last Resort settlement agreement. Direct testimony before the Federal Energy Regulatory Commission (FERC) on behalf of Northeast Utilities Service Company, Docket No. ER01-2584-000, July 13, 2001, in regard to competitive impacts of a proposed merchant transmission line from Connecticut to Long Island. Direct testimony before the Vermont Public Service Board on behalf of Vermont Gas Systems, Inc., Docket No. 6495, April 13, 2001, regarding Vermont Gas System's proposed risk management program and deferred cost recovery account for gas purchases. Affidavit on behalf of Public Service Company of New Mexico, before the Federal Energy Regulatory Commission (FERC), Docket No. ER96-1551-000, March 26, 2001, to provide an updated application for market based rates. Affidavit on behalf of the New York State Electric and Gas Corporation, April 19, 2000, before the New York State Public Service Commission, In the Matter of Customer Billing Arrangements, Case 99-M-0631. Supplemental Direct and Reply Testimonies of Frank C. Graves and A. Lawrence Kolbe (jointly) on behalf of Southern California Edison Company, Docket Nos. ER97-2355-00, ER98-1261-

000, ER98-1685-000, November 1, 1999, regarding risks and cost of capital for transmission services. Expert report before the United States Court of Federal Claims on behalf of Connecticut Yankee Atomic Power Company, Connecticut Yankee Atomic Power Company, Plaintiff v. United States of America, No. 98-154 C, June 30, 1999, regarding non-performance of the U.S. Department of Energy in accepting spent nuclear fuel under the terms of its contract. Expert report before the United States Court of Federal Claims on behalf of Maine Yankee Atomic Power Company, Maine Yankee Atomic Power Company, Plaintiff v. United States of America, No. 98-474 C, June 30, 1999, regarding the damages from non-performance of the U.S. Department of Energy in accepting spent nuclear fuel and high-level waste under the terms of its contract. Expert report before the United States Court of Federal Claims on behalf of Yankee Atomic Electric Company, Yankee Atomic Electric Company, Plaintiff v. United States of America, No. 98-126 C, June 30, 1999, regarding the damages from non-performance of the U.S. Department of Energy in accepting spent nuclear fuel and high-level waste under the terms of its contract. Prepared direct testimony before the Federal Energy Regulatory Commission on behalf of National Rural Utilities Cooperative Finance Corporation, Inc., Cities of Anaheim and Riverside, California v. Deseret Generation & Transmission Cooperative, Docket No. EL97-57-001, March 1999, regarding cost of service for rural cooperatives versus investor-owned utilities, and coal plant valuation. Expert report and oral examination before the Independent Assessment Team for industry restructuring appointed by the Alberta Energy and Utilities Board on behalf of TransAlta Utilities Corporation, January 1999, regarding the cost of capital for generation under long-term, indexed power purchase agreements. Oral testimony before the Commonwealth of Massachusetts Appellate Tax Board on behalf of Indeck Energy Services of Turners Falls, Inc., Turners Falls Limited Partnership, Appellant vs. Town of Montague, Board of Assessors, Appellee, Docket Nos. 225191-225192, 233732-233733, 240482-240483, April 1998, regarding market conditions and revenues assessment for property tax basis valuation. Direct and joint supplemental testimony before the Pennsylvania Public Utility Commission on behalf of Pennsylvania Electric Company and Metropolitan Edison Company, No. R-00974009, et al., December 1997, regarding market clearing prices, inflation, fuel costs, and discount rates. Direct Testimony before the Pennsylvania Public Utilities Commission on behalf of UGI Utilities, Inc., Docket No. R-00973975, August 1997, regarding forecasted wholesale market energy and capacity prices.

Testimony before the Public Utilities Commission of the State of California on behalf of the Southern California Edison Company, No. 96-10-038, August 1997, regarding anticompetitive implications of the proposed Pacific Enterprises/ENOVA mergers. Direct and supplemental testimony before the Kentucky Public Service Commission on behalf of Big Rivers Electric Corporation, No. 97-204, June 1997, regarding wholesale generation and transmission rates under the bankruptcy plan of reorganization. Affidavit before the Federal Energy Regulation Commission on behalf of the Southern California Edison Company in Docket No. EC97-12-000, March 28, 1997, filed as part of motion to intervene and protest the proposed merger of Enova Corporation and Pacific Enterprises. Direct, rebuttal, and supplemental rebuttal testimony before the State of New Jersey Board of Public Utilities on behalf of GPU Energy, No. EO97070459, February 1997, regarding market clearing prices, inflation, fuel costs, and discount rates. Oral direct testimony before the State of New York on behalf of Niagara Mohawk Corporation in Philadelphia Corporation, et al., v. Niagara Mohawk, No. 71149, November 1996, regarding interpretation of low-head hydro IPP contract quantity limits. Oral direct testimony before the State of New York on behalf of Niagara Mohawk Corporation in Black River Limited Partnership v. Niagara Mohawk Power Corporation, No. 94-1125, July 1996, regarding interpretation of IPP contract language specifying estimated energy and capacity purchase quantities. Oral direct testimony on behalf of Eastern Utilities Associates before the Massachusetts Department of Public Utilities, No. 96-100 and 2320, July 1996, regarding issues in restructuring of Massachusetts electric industry for retail access. Affidavit before the Kentucky Public Service Commission on behalf of Big Rivers Electric Corporation in PSC Case No. 94-032, June 1995, regarding modifications to an environmental surcharge mechanism. Rebuttal testimony on behalf of utility in Eastern Energy Corporation v. Commonwealth Electric Company, American Arbitration Association, No. 11 Y 198 00352 04, March 1995, regarding lack of net benefits expected from a terminated independent power project. Direct testimony before the Pennsylvania Public Utility Commission on behalf of Pennsylvania Power & Light Company in Pennsylvania Public Utility Commission et al. v. UGI Utilities, Inc., Docket No. R-932927, March 1994, regarding inadequacies in the design and pricing of UGI's proposed unbundling of gas transportation services. Direct testimony before the Pennsylvania Public Utility Commission, on behalf of Interstate Energy Company, Application of Interstate Energy Company for Approval to Offer Services in the Transportation of Natural Gas, Docket No. A-140200, October 1993, and rebuttal testimony, March 1994.

Direct testimony before the Pennsylvania Public Utility Commission, on behalf of Procter & Gamble Paper Products Company, Pennsylvania Public Utility Commission v. Pennsylvania Gas and Water Company, Docket No. R-932655, September 1993, regarding PG&W's proposed charges for transportation balancing. Oral rebuttal testimony before the American Arbitration Association, on behalf of Babcock and Wilcox, File No. 53-199-00127-92, May 1993, regarding the economics of an incentive clause in a cogeneration operations and maintenance contract. Answering testimony before the Federal Energy Regulatory Commission, on behalf of CNG Transmission Corporation, Docket No. RP88-211-000, March 1990, regarding network marginal costs associated with the proposed unbundling of CNG. Direct testimony before the Federal Energy Regulatory Commission, on behalf of Consumers Power Company et al., concerning the risk reduction for customers and the performance incentive benefits from the creation of Palisades Generating Company, Docket No. ER89-256-000, October 1989, and rebuttal testimony, Docket No. ER90-333-000, November 1990. Direct testimony before the New York Public Service Commission, on behalf of Consolidated Natural Gas Transmission Corporation, Application of Empire State Pipeline for Certificate of Public Need, Case No. 88-T-132, June 1989, and rebuttal testimony, October, 1989. PUBLICATIONS, PAPERS, AND PRESENTATIONS “Trading at the Speed of Light: The Impact of High-Frequency Trading on Market Performance, Regulatory Oversight, and Securities Litigation,” by Pavitra Kumar, Michael Goldstein, and Frank Graves 2011 No. 2 (Brattle Finance white paper). “Dodd-Frank and Its Impact on Hedging Strategies,” Law Seminars International Electric Utility Rate Cases Conference, February 10, 2011. “Potential Coal Plant Retirements Under Emerging Environmental Regulations,” Metin Celebi and Frank Graves, Brattle presentation, December 2010. “Risk-Adjusted Damages Calculation in Breach of Contract Disputes: A Case Study,” by Frank C. Graves, Bin Zhou, Melvin Brosterman, Quinlan Murphy, Journal of Business Valuation and Economic Loss Analysis 5, no. 1, October 2010. “Gas Price Volatility and Risk Management,” with Steve Levine, AGA Energy Market Regulation Conference, Seattle, WA, September 30, 2010. “Managing Natural Gas Price Volatility: Principles and Practices across the Industry,” with Steve Levine, American Clean Skies Foundation Task Force on Ensuring Stable Natural Gas Markets, July 2010.

“A Changing Environment for Distcos,” NMSU Center for Public Utilities, The Santa Fe Conference, March 15, 2010. "Prospects for Natural Gas Under Climate Policy Legislation: Will There Be a Boom in Gas Demand?," by Steven H. Levine, Frank C. Graves, and Metin Celebi, The Brattle Group, Inc., March 2010. “Gas Price Volatility and Risk Management,” with Steve Levine, Law Seminars International Rate Cases: Current Issues and Strategies, Las Vegas, NV, February 11, 2010. “Hedging Effects of Wind on Retail Electric Supply Costs,” with Julia Litvinova, The Electricity Journal, Volume 22, No. 10, December 2009. “Overview of U.S. Electric Policy Issues,” Los Alamos Education Committee, June 2009. “IRP Challenges of the Coming Decade” NARUC Conference, Washington, D.C., February 17, 2009. "Volatile CO2 Prices Discourage CCS Investment," by Metin Celebi and Frank C. Graves, The Brattle Group, Inc., January 2009. "Drivers of New Generation Development - A Global Review," by Frank C. Graves and Metin Celebi, EPRI, 2008. “Utility Supply Portfolio Diversity Requirements” (with Philip Q Hanser), The Electricity Journal, Volume 20, Issue 5, June 2007, pp. 22-32. “Electric Utility Automatic Adjustment Clauses: Why They Are Needed Now More Than Ever” (with Philip Q Hanser and Greg Basheda), The Electricity Journal, Volume 20, Issue 5, June 2007, pp. 33-47. “Rate Shock Mitigation,” (with Greg Basheda and Philip Q Hanser), prepared for the Edison Electric Institute (EEI), May, 2007. “PURPA Provisions of EPAct 2005: Making the Sequel Better than the Original” presented at Center for Public Utilities Advisory Council – New Mexico State University Current Issues Conference 2006 , Santa Fe, New Mexico, March 21, 2006. “The New Role of Regulators in Portfolio Selection and Approval” (with Joseph B. Wharton), presented at EUCI Resource and Supply Planning Conference, New Orleans, November 4, 2004. “Disincentives to Utility Investment in the Current World of Competitive Regulation,” (with August Baker), prepared for the Edison Electric Institute (EEI), October, 2004. “Power Procurement for Second-Stage Retail Access” (with Greg Basheda), presented at Illinois Commerce Commission’s ‘Post 2006 Symposium’, Chicago, IL, April 29, 2004.

“Utility Investment and the Regulatory Compact,” (with August Baker), presented to NMSU Center for Public Utilities Advisory Council, Santa Fe, New Mexico, March 23, 2004. “How Transmission Grids Fail,” (with Martin L. Baughman) presented to NARUC Staff Subcommittee on Accounting and Finance, Spring 2004 Meeting, Scottsdale, Arizona, March 22, 2004. “Resource Planning & Procurement in Restructured Electricity Markets,” presented to NARUC Winter Committee Meetings, Washington, D.C., March 9, 2004. “Resource Planning and Procurement in Evolving Electricity Markets,” (with James A. Read and Joseph B. Wharton), white paper for Edison Electric Institute (EEI), January 31, 2004. “Transmission Management in the Deregulated Electric Industry – A Case Study on Reactive Power” (with Judy W. Chang and Dean M. Murphy), The Electricity Journal, Volume 16, Issue 8, October, 2003. “Flaws in the Proposed IRS Rule to Reinstate Amortization of Deferred Tax Balances Associated with Generation Assets Reorganized in Industry Restructuring,” (with Michael J. Vilbert), white paper for Edison Electric Institute (EEI) to the IRS, July 25, 2003. “Resource Planning & Procurement in Restructured Electricity Markets” (with James A. Read and Joseph B. Wharton), presented at Northeast Mid-Atlantic Regional Meeting of Edison Electrical Institute, Philadelphia, PA, May 6, 2003 and at Midwest Regional Meeting, Chicago, IL, June 18, 2003. “New Directions for Safety Net Service – Pricing and Service Options” (with Joseph B. Wharton), white paper for Edison Electric Institute (EEI), May 2003. “Volatile Markets Demand Change in State Regulatory Evaluation Policies,” (with Steven H. Levine), chapter 20 of Electric & Natural Gas Business: Understanding It!, edited by Robert E. Willett, Financial Communications Company, Houston, TX, February 2003, pp. 377-405. “New York Power Authority Hydroelectric Project Production Rates,” report prepared for NYPA (New York Power Authority) on the embedded costs of production of ancillary services at the Niagara and St. Lawrence hydroelectric projects, 2001-2006, January 22, 2003. “Regulatory Policy Should Encourage Hedging Programs” (with Steven H. Levine), Natural Gas, Volume 19, Number 4, November 2002. “Measuring Gas Market Volatility - A Survey” (with Paolo Coghe and Manuel Costescu), presented at the Stanford Energy Modeling Forum, Washington, D.C., June 24, 2002. “Unbundling and Rebundling Retail Generation Service: A Tale of Two Transitions” (with Joseph B. Wharton), presented at the Edison Electric Institute Conference on

Unbundling/Rebundling Utility Generation and Transmission, New Orleans, LA, February 25, 2002. “Regulatory Design for Reactive Power and Voltage Support Services” (with Judy W. Chang), prepared for Comision de Regulacion de Energia y Gas, Bogotá, Colombia, December 2001. “Provider of Last Resort Service Hindering Retail Market Development” (with Joseph B. Wharton), Natural Gas, Volume 18, Number 3, October 2001. “Strategic Management of POLR Obligations” presented at Edison Electric Institute and the Canadian Electricity Association Conference, New Orleans, LA, June 5, 2001. “Measuring Progress Toward Retail Generation Competition” (with Joseph B. Wharton) Edison Electric Institute E-Forum presentation, May 16, 2001. “International Review of Reactive Power Management” (with Judy W. Chang), presented to Comision de Regulacion de Energia y Gas, Bogotá, Colombia, May 4, 2001. “POLR and Progress Towards Retail Competition - Can Kindness Kill the Market?” (with Joseph B. Wharton), presented at the NARUC Winter Committee Meeting, Washington, D.C., February 27, 2001. “What Role for Transitional Electricity Price Protections After California?” presented to the Harvard Electricity Policy Group, 24th Plenary Session, San Diego, CA, February 1, 2001. “Estimating the Value of Energy Storage in the United States: Some Case Studies” (with Thomas Jenkin, Dean Murphy and Rachel Polimeni) prepared for the Conference on Commercially Viable Electricity Storage, London, England, January 31, 2001. “PBR Designs for Transcos: Toward a Competitive Framework” (with Steven Stoft), The Electricity Journal, Volume 13, Number 7, August/September 2000. “Capturing Value with Electricity Storage in the Energy and Ancillary Service Markets” (with Thomas Jenkin, Dean Murphy and Rachel Polimeni) presented at EESAT, Orlando, Florida, September 18, 2000. “Implications of ISO Design for Generation Asset Management” (with Edo Macan and David A. Andrade), presented at the Center for Business Intelligence’s Conference on Pricing Power Products & Services, Chicago, Illinois, October 14-15, 1999. “Residual Service Obligations Following Industry Restructuring” (with James A. Read, Jr.), paper and presentation at the Edison Electric Institute Economic Regulation and Competition Committee Meeting, Longboat Key, Florida, September 26-29, 1999. Also presented at EEI’s 1999 Retail Access Conference: Making Retail Competition Work, Chicago, Illinois, September 30-October 1, 1999.

“Opportunities for Electricity Storage in Deregulating Markets” (with Thomas Jenkin and Dean Murphy), The Electricity Journal, October 1999. How Competitive Market Dynamics Affect Coal, Nuclear and Gas Generation and Fuel Use – A 10 Year Look Ahead (with L. Borucki, R. Broehm, S. Thumb, and M. Schaal), Final Report, May 1999, TR-111506 (Palo Alto, CA: Electric Power Research Institute, 1999). “Price Caps for Standard Offer Service: A Hidden Stranded Cost” (with Paul Liu), The Electricity Journal, Volume 11, Number 10, December 1998. Mechanisms for Evaluating the Role of Hydroelectric Generation in Ancillary Service Markets (with R.P. Broehm, R.L. Earle, T.J. Jenkin, and D.M. Murphy), Final Report, November 1998, TR-111707 (Palo Alto, CA: Electric Power Research Institute, 1998). “PJM Market Competition Evaluation White Paper,” (with Philip Hanser), prepared for PJM, L.L.C., October, 1998. “The Role of Hydro Resources in Supplying System Support and Ancillary Services,” presented at the EPRI Generation Assets Management Conference, Baltimore, Maryland, July 13-15, 1998. Published in EPRI Generation Assets Management 1998 Conference: Opportunities and Challenges in the Electric Marketplace, Proceedings, November 1998, TR-111345 (Palo Alto, CA: EPRIGEN, Inc., 1998). “Regional Impacts of Electric Utility Restructuring on Fuel Markets” (with S.L. Thumb, A.M. Schaal, L.S. Borucki, and R. Broehm), presented at the EPRI Generation Assets Management Conference, Baltimore, Maryland, July 13-15, 1998. Published in EPRI Generation Assets Management 1998 Conference: Opportunities and Challenges in the Electric Marketplace, Proceedings, November 1998, TR-111345 (Palo Alto, CA: EPRIGEN, Inc., 1998). Energy Market Impacts of Electric Industry Restructuring: Understanding Wholesale Power Transmission and Trading (with S.L. Thumb, A.M. Schaal, L.S. Borucki, and R. Broehm), Final Report, March 1998, EPRI TR-108999, GRI-97/0289 (Palo Alto, CA: Electric Power Research Institute, 1998). “Pipeline Pricing to Encourage Efficient Capacity Resource Decisions”(with Paul R. Carpenter and Matthew P. O’Loughlin), filed in FERC proceedings Financial Outlook for the Natural Gas Pipeline Industry, Docket No. PL98-2-000, February 1998. “One-Part Markets for Electric Power: Ensuring the Benefits of Competition” (with E. Grant Read, Philip Q Hanser, and Robert L. Earle), Chapter 7 in Power Systems Restructuring: Engineering and Economics, M. Ili , F. Galiana, and L. Fink, eds. Kluwer Academic Publishers, 1998, reprint 2000), pp. 243-280. “Railroad and Telecommunications Provide Prior Experience in ‘Negotiated Rates’” (with Carlos Lapuerta), Natural Gas, July 1997.

“Considerations in the Design of ISO and Power Exchange Protocols: Procurement Bidding and Market Rules” (with J.P. Pfeifenberger), presented at the Electric Utility Consultants Bulk Power Markets Conference, Vail, Colorado, June 3-4, 1997. “The Economics of Negative Barriers to Entry: How to Recover Stranded Costs and Achieve Competition on Equal Terms in the Electric Utility Industry” (with William B. Tye), Electric Industry Restructuring, Natural Resources Journal, Volume 37, No. 1, Winter 1997. “Capacity Prices in a Competitive Power Market” (with James A. Read), The Virtual Utility: Accounting, Technology & Competitive Aspects of the Emerging Industry, S. Awerbuch and A. Preston, eds. (Boston: Kluwer Academic Publishers, 1997), pages 175-192. “Stranded Cost Recovery and Competition on Equal Terms” (with William B. Tye), Electricity Journal, Volume 9, Number 10, December 1996. “Basic and Enhanced Services for Recourse and Negotiated Rates in the Natural Gas Pipeline Industry” (with Paul R. Carpenter, Carlos Lapuerta, and Matthew P. O’Loughlin), filed on behalf of Columbia Gas Transmission Corporation and Columbia Gulf Transmission Company, in its Comments on Negotiated Rates and Terms of Service, FERC Docket No. RM96-7, May 29, 1996. “Premium Value for Hydro Power in a Deregulated Industry? Technical Opportunities and Market Structure Effects,” presented to the EPRI Hydro Steering Committee Conference, Chattanooga, Tennessee, April 19, 1996, and to the EPRI Energy Storage Benefits Workshop, New Orleans, Louisiana, May 22, 1996. “Distributed Generation Technology in a Newly Competitive Electric Power Industry” (with Johannes P. Pfeifenberger, Paul R. Ammann, and Gary A. Taylor), presented at the American Power Conference, Illinois Institute of Technology, April 10, 1996. “A Framework for Operations in the Competitive Open Access Environment” (with Marija D. Ili , Lester H. Fink, Albert M. DiCaprio), Electricity Journal, Volume 9, Number 3, April 1996. “Prices and Procedures of an ISO in Supporting a Competitive Power Market” (with Marija Ili ), presented at the Restructuring Electric Transmission Conference, Denver, Colorado, September 27, 1995. “Potential Impacts of Electric Restructuring on Fuel Use,” EPRI Fuel Insights, Issue 2, September 1995. “Optimal Use of Ancillary Generation Under Open Access and its Possible Implementation” (with Maria Ili ), M.I.T. Laboratory for Electromagnetic and Electronic Systems Technical Report, LEES TR-95-006, August 1995. “Estimating the Social Costs of PUHCA Regulation” (with Paul R. Carpenter), submitted to the Security and Exchange Commission's Request for Comments on Modernization of the Regulation of Public Utility Holding Companies, SEC File No. S7-32-93, February 6, 1995.

A Primer on Electric Power Flow for Economists and Utility Planners, TR-104604, The Electric Power Research Institute, EPRI Project RP2123-19, January 1995. “Impacts of Electric Industry Restructuring on Distributed Utility Technology,” presented to the Electric Power Research Institute/National Renewable Energy Laboratory/Florida Power Corporation Conference on Distributed Generation, Orlando, Florida, August 24, 1994. Pricing Transmission and Power in the Era of Retail Competition” (with Johannes P. Pfeifenberger), presented at the Electric Utility Consultants' Retail Wheeling Conference, Beaver Creek, Colorado, June 21, 1994. “Pricing of Electricity Network Services to Preserve Network Security and Quality of Frequency Under Transmission Access” (with Dr. Marija Ili , Paul R. C Response and Reply comments to the Federal Energy Regulatory Commission in is Notice of Technical Conference on Transmission Pricing, Docket No. RM-93-19-000, November 1993 and January 1994. “Evaluating and Using CAAA Compliance Cost Forecasts,” presented at the EPRI Workshop on Clean Air Response, St. Louis, Missouri, November 17 and Arlington, Virginia, November 19, 1992. “Beyond Valuation—Organizational and Strategic Considerations in Capital Budgeting for Electric Utilities,” presented at EPRI Capital Budgeting Notebook Workshop, New Orleans, Louisiana, April 9-10, 1992. “Unbundling, Pricing, and Comparability of Service on Natural Gas Pipeline Networks” (with Paul R. Carpenter), as appendix to Comments on FERC Order 636 filed by Interstate Natural Gas Association of America, November 1991. “Estimating the Cost of Switching Rights on Natural Gas Pipelines” (with James A. Read, Jr. and Paul R. Carpenter), presented at the M.I.T. Center for Energy Policy Research, "Workshop on New Methods for Project and Contract Evaluation," March 2-4, 1988; and in The Energy Journal, Volume 10, Number 4, October 1989. “Demand-Charge GICs Differ from Deficiency-Charge GICs” (with Paul R. Carpenter), Natural Gas, August 1989. “What Price Unbundling?” (with P.R. Carpenter), Natural Gas, June 1989. “Price-Demand Feedback,” presented at EPRI Capital Budgeting Seminar, San Diego, California, March 2-3, 1989. “Applications of Finance to Electric Power Planning,” presented at the World Bank, Seminar on Risk and Uncertainty in Power System Planning, October 13, 1988.

“Planning for Electric Utilities: The Value of Service” (with James A. Read, Jr.), in Moving Toward Integrated Value-Based Planning, Electric Power Research Institute, 1988. “Valuation of Standby Charges for Natural Gas Pipelines” (with James A. Read, Jr. and Paul R. Carpenter), presented to M.I.T. Center for Energy Policy Research, October, 1987.

June 20, 2016